Dave Ramsey: Family and business

Tuesday

Apr 11, 2017 at 11:22 AMApr 11, 2017 at 12:02 PM

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Dear Dave,

My husband and I own a small business. One of our relatives asked for a job recently, and we both have reservations about hiring him because there are several dysfunctional relationships and personalities within our extended family. Are we being mean? We’re not sure how to respond.

-- Becky

Dear Becky,

Having a small business doesn’t give relatives a free pass to employment. As entrepreneurs, you have the right and responsibility to do what’s best for your company. And you don’t have to hire anyone -- even a relative -- who’s not a good fit.

There are situations where hiring a family member can actually be a plus. If a relative is qualified and the kind of person who understands they’ll have to bust it every single day and perform at a level equal to or above your other team members, that can be a special and productive thing. A relative who is a problem child, however, can be a nightmare in both your professional and personal lives.

Ask yourself a few questions: Would you hire this person if they weren’t part of the family? Would you hire this person because they would make a good team member? If the answers are no, then you don’t hire them -- period.

Be kind about the situation, because there may be some bruised feelings. But the bottom line is you have to do what’s best for your business, your immediate family, and your team.

--Dave

Don’t be house poor

Dear Dave,

I read where you recommend having your house payment or rent at an amount that’s 25 percent or less of your monthly take-home pay. Does this figure include property taxes and insurance too?

-- Mark

Dear Mark,

Yes, it does. I’m trying to keep you from being “house poor.” Did you know you can qualify for a house payment, with taxes and insurance, that’s close to half of your take-home pay? That’s ridiculous. When you don’t have room in your budget to do anything else that matters because your house payment is so large, that’s what we call house poor.

When your income minus your basic living expenses equals almost nothing, it means your basic living expenses are way too high. Being in this kind of situation keeps you from saving for really important stuff like investing, retirement, and college for your kids. I’m trying to position you where you can get the house and everything paid off so you can become wealthy. Remember, your most powerful wealth building tool is your income.

When we talk about driving a crappy car, not going out to eat, or not going on vacation -- those are temporarythings. It’s all about living like no one else, so that later you can live and give like no one else.

-- Dave

-- Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 12 million listeners each week on 575 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.